ECON
lect2 notes

# Macroeconomics plus MyEconLab plus eBook 1-semester Student Access Kit (6th Edition)

• Notes
• PresidentHackerCaribou10582
• 4

This preview shows pages 1–2. Sign up to view the full content.

Econ 304 Sonoma State University Spring 2003 Dr. Robert Eyler Lecture #2 Measurement Issues I. Measuring GDP: Three approaches a. Product Approach : Also known as the “Value-Added” Approach a. This is basically the revenuegenerated from the sale of goods, less their cost of intermediate goods. b. The products themselves have value above and beyond the amount of cost of raw materials. c. The cost of labor capital, land and entrepreneurship are considered to be in the “mark-up” or “value-added” d. The sum of all value added in the economy is equal to GDP. b. Expenditures Approach a. The classic way that GDP is measured and the way that we use after this lecture. b. GDP = C + I + G + NX, where NX = EX – IM. c. This is the building blocks of the AE model. c. Income Approach a. Sum of all incomes to economic agents is GDP b. GDP = wages + salaries + taxes + profits + land rents c. Notice the connection to both the other approaches here. d. In general, macroeconomic equilibrium is defined partially by the identity: Y = C + I + G + NX d. The differences between GDP and GNP are simple and large in their implications. 1. The need to investigate GDP comes from an avoidance of double counting and also the belief that countries react to changes in GDP rather than GNP, though they are closely tied. 2. Where is the underground economy? a. Should we start to measure this activity?

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern